In this research article, I’ll discuss:
- Arbitrum Technology Overview
- A major Lending protocol on Arbitrum
- A major Dex protocol on Arbitrum
- A major CDP protocol on Arbitrum
- A major Yield protocol on Arbitrum
- Closing (Summary)
ARBITRUM TECHNOLOGY OVERVIEW
Arbitrum is an L2 scaling solution for Ethereum. It’s built to bring in the scalability of transactions on the Ethereum chain using optimistic rollups tech.
Its benefits/features include:
- The ability to run unmodified EVM contracts and unmodified Ethereum transactions.
- Designed and engineered to maximize the L2 gas footprint of the system, maximizing per-cost transactions
- The moving of contracts computation and storage of the main Ethereum chain, therefore allowing much throughput
No other L2 systems provide all these features at the same cost, this makes Arbitrum outstanding.
A major upgrade to the Arbitrum system is called Nitro: which is aimed at improving Arbitrum in several ways such as
- By using advanced call data to compress transaction costs on Arbitrum, thereby reducing the data
- Increasing the performance of L1 nodes and thus offering low fees
- A synchronization with L1 block numbers and full support for all the Ethereum precompiles
The Arbitrum Defi ecosystem has a TVL of 2.51b with over 250 protocols integrated and built on the system. A major leading Defi category protocol on the Arbitrum system is the decentralized exchange.
Let's analyse a few protocols built on Arbitrum, with their different categories
LENDING PROTOCOL
Lodestar finance: Lodestar finance is an algorithmic borrowing and lending protocol that is aimed to bring the critical Defi primitive of decentralized money markets to Arbitrum communities.
It has the following features:
- The ability for users to earn interest on Arbitrum assets like MAGIC, GMX, plvGLP by supplying them to the protocol
- Access to identify liquidity without creating a taxable event
- The employment of leverage trading strategies (long & short) positions by utilizing the borrowing functionalities of the protocol.
Technical overview
- Supply asset: when users deposit their tokens into the protocol, the user receives a derivative representing the underlying asset.
- Collateralized asset: A user who supplies an asset into the protocol begins g interest automatically,
- Borrow rate: The borrowing rate is the prevailing interest of the asset a user is borrowing
- Reserve: The reserve acts as a backstop to the market, acting as insurance liquidity for the respective market.
Roadmap
- Growth phase (VO): Lidoster Finance has launched its initial money made for ETH, USDC, MAGIC, DPX, USDT, BTC, FRAX, ADA, MIN and plvGLP
- Yield phase (V1): In V1, one of the ways the lodestar team aims to approach buying more yield to its users is the ability to collateralize liquid stakassetsetse plsDPX. Holder will be able to earn all the emissions.
Tokenomics
Supply
The total supply of 20 million LODE, it’s distributed as follows
- 60% to emission
- 18% to the team
- 9% to investors (community presale)
- 5% to Treasury
- 3% to employees
- 2% to the community fund
- 2% to the protocol-owned liquidity
- 1% to special Arbitrum Odyssey event
Demand (Use case)
1. Governance: LODE is a governance token that represents a holder’s share of the DAO. As a token holder, you can vote proposal governing the protocol, and voting power is proportional to the token share
2. Platform revenue share: LODE token holders can stake tokens for a perpetual share of protocol fees, paid in ETH
DECENTRALlZED EXCHANGE
Ramses Exchange: RAMSES is ve(3,3) DEX that masterfully adapts Andre Cronje's initial vision solidly.
The original solid fundamentals have long been forgotten and RAMSES aims to revitalize three core tenets:
- Community: Ramses is meant to launch with a heavy focus on the wide ecosystem, offering veNFTs to top protocols on Arbitrum.
- Decentralization: RAMSES strives to be as fully decentralized as possible, While still maintaining functionality and council of trusted entities from the wife community to events in emergencies.
- Functionalities: RAMSES leverages some of the best functions implemented in DEXES. The functionality of the platform is tied to the innovation and underlying value that Ramses provides
Ramses functionality
- Swaps: similar to any other Dex, you can swap tokens on Ramses for others. The slippage & price of the trader are determined with direct regard to the amount of total value locked in the liquidity pairs, it has two types of swap i. The volatile swap of the 50/50 liquidity pool and ii. The correlated stable curve iis s used by Ramses for a more efficient implementation of stable swaps.
- Voting: the main purpose of the veRAM NFT is to direct emissions to LP token pairs. This is achieved through voting for the pair. Emissions are distributed proportionally to the total percentage of the votes in the epoch
- Vesting: (veNFT management): Managing veRAM (veNFT) positions is a crucial part of Ramses' model.
- LP staking: In the RAMSES model, LP providers do not want swap fees since 100% of the fees go to the veRAM holders. The more vote allocated to the pair, the more RAN will be emitted to the gauge.
Tokenomics
Total supply: 500,000,000 RAM
Initial supply: 125, 000,000 RAM
And am 75,000,000
Total allocation
moSOLlD Migration bonus 1% 5,000,000
LGE. 4% 20,000,000
Team 10% 50,000,000
Ecosystem incentives 10% 50,000,000
VRAM allocation 15% 75,000,000
Emission 60% 300,000,000
COLLARERIZED DEBT POSITION (CDP)
Vesta Finance: Vesta is a collateralized debt platform users can lock up collateral and issue Vesta's stablecoin VST to their Ethereum address and subsequently transfer those tokens to any other Ethereum address.
The individual collateralized position is called a vault. The stablecoin tokens are economically geared towards maintaining a value of 1 VST = USD 1 due to the fact the system is designed to always be overcollarized & the e-ecosystem algorithmically controls the creation of VST through a variable in interest fee dictated by the tokens' peg.
Liquidation & stability pools
Vesta utilizes an offset under-collateralized vault against the stability pools & incredible undercollaterized vaults to the borrowers if the stability pool is emptied.
Vesta primarily uses the VST token in its stability pools to absorb the undercollaterized debt to repay the liquidation borrower's liability.
Tokenomics
- Supply 100 million
Allocation
- Community treasury 63.0%
- Core contributors 21.0%
-Advisors 4.0%
- Strategic Partners 6.0%
- Whitelisting 1.0%
- Olympus DAO 1.0%
Overview of the Vesta finance
The protocol allows users to deposit collateral to mint VST (Vesta Stables). It enables a multi-collateral model like (ETH/renBTC). There is a low collateralization ratio. 60%+ of the governance token (VSTA) is in the community treasury, dedicated to the growth of the protocol. The governance model allows parameters like minting fees, liquidation fees, and liquidation incentives to be decided by the token holders.
YIELD
PlutusDAO
Plutus is an Arbitrum native governance aggregator aiming to maximize users' liquidity and rewards while simultaneously aggregating governance behind the PLS token.
Plutus's objective is to become the de-factor layer 2 governance blackhole for projects with tokens.
Plutus has collaborated with Dopex, Radiant, GMX, Sparax, and Jones for a variety of Pluto-related governance models.
Product
Plutus has two main product categories: plsAsset and plvAsset
plsAsset are related to governance aggregating and maximizing liquidity and rewards for users.
Its asset includes plsDPX, plsARB, plsRDNT, peSPA, plsJONES
plvAsset are vaulted product built to maximize rewards for end users, also offering a compelling building block for other protocols to use
Tokenomics
Max supply 100,000,000
- Platform rewards - 35% (35,000,000)
- Liquidity mining - 15% (15,000,000)
- Operational allocation - 13.8%
- Bonding - 10%
- Public TGE 10%
- Private TGE 4.20%
- Plutus team - 12%
Demand (Use case)
PLS is the native governance token of Plutus
- It can be locked on Plutus in monthly epoch to earn yield from bribes. The token lockers receive control over the governance of the underlying asset.
CLOSING SUMMARY
Arbitrum Defi ecosystem is expected to grow over time, with a TVL of over $2.51b, comprising of major Defi protocols integration such as GMX, Radiant, Uniswap, AAVE V3, Stargate & Curve. With the need for a good L2 Chain such as Arbitrum, it’s expected that it’s technological make-up should bring in more efficient Defi projects, especially the ones that will be mainly deployed on the Arbitrum Chain.
The future of Arbitrum Defi ecosystem is yet to be fully discovered, let’s wait and see what the future holds.
